The Morning Consult discusses a poll today on people’s views ofthe Patient Protection and Affordable Care Act. It looks likepeople are moderately afraid of “employer dumping” -- employersterminating benefits and forcing employees to buy insurancepolicies on the exchanges. Most of them seem to think that thiswould have a somewhat or very negative impact on their coverage andexperience. Unsurprisingly, this breaks down strongly alongpartisan lines: Republicans are most likely to think PPACA willnegatively affect them, Democrats the least.

|

See also: Workersfret getting shifted to exchanges

|

But how likely is this? There are all sorts of estimates outthere, but all of them are barely one step above a wild guess.We’ve never done anything like this before, so how do we know howemployers will react? But there’s one thing worth noting: If youbelieve the poll, the very strength of the negative expectationsprobably makes employers less likely to do this.

|

After all, why do employers offer insurance in the first place?Yes, yes: tax arbitrage. Wages are taxable to employees, whilefringe benefits aren’t, so you can offer higher overallcompensation by substituting benefits for wages.

|

But that’s also true of luxuriously appointed offices. Yetrelatively few employers have chosen to provide everyone acavernous office with a luxe couch and a wine fridge. A lot ofemployers, on the other hand, provide luxe health benefits. Thedifference is that employees value the health benefits highlyenough to trade off a lot of wages for them. For all the talk abouthow people are insulated from the cost of their insurance, if youfollow union negotiations, you’ll know that when it comes to makingexplicit trade-offs between more expensive benefits and higherwages, the union representatives very frequently choose thebenefits.

|

See also: Shiftto public exchanges could save employers $3trillion

|

That suggests that as long as employees are afraid of theexchanges, employers are going to be reluctant to force them there.This effect will probably be weakest at the low end, where theworkforce is already struggling to find and keep jobs, but amongmiddle-class people with relatively secure employment, I’d expectrelatively little dumping in the near- to medium-term.

|

Eventually, of course, there may be a tipping point. If one bigemployer in your industry dumps, others may have to follow in shortorder to remain cost-competitive. And the more companies that dump,the easier the remaining companies will find it to dump theiremployees, because they’ll have less and less worry that you’llfind another job with in-house health insurance.

|

That wouldn’t necessarily be a negative thing; a lot of healthexperts think that dumping will ultimately be good, because it willforce people to be more conscious consumers of health insurance.But good or bad, it’s probably a ways into the future.

|

To contact the writer of this article: Megan McArdle [email protected].

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.